Manhattan Office Vacancy Falls to 12.6%, Its Lowest Since Before 2020

Broad-based demand pushed Manhattan office vacancy to its lowest point since before 2020, and tenants are paying up for space.

October 13, 2026

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Manhattan Office Vacancy Falls to 12.6%, Its Lowest Since Before 2020

Good morning. Manhattan offices just posted their tightest market in years. Employers want staff in five days a week, and many are running out of desks.

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Market Snapshot

Most Active Neighborhood

By Deal Count

Bedford-Stuyvesant — 9 sales

Properties Sold

All Asset Types

137

Transaction Volume

Sales Activity

$1.03B

Top Office Submarket

Avg Starting Rent

Hudson Yards

$158.50 / SF

Manhattan Office Rent

Avg Effective

$83.69 / SF

Office Rent Growth

YoY Change

+17.5%

*Office metrics courtesy of CompStak; data from 4/01/26 to 6/30/26. Sales metrics courtesy of Actovia; NYC properties reported sold during the week of 8/7/26 – 8/13/26.

Seat Squeeze

Manhattan Tenants Run Short of Desks as Office Vacancy Keeps Falling

Manhattan's office recovery is now broad enough that firms are running short of desks, not just space.

By the numbers: Vacancy fell to 12.6% in the third quarter, down from 13.1% in Q2 and 14.7% a year earlier, the lowest level since before 2020. Leasing volume rose 2.3% YoY and direct asking rent reached $84.56/SF.

Every sector is back: JLL says the gains were broad-based across major industries, and CBRE's Neil King said big tech is returning alongside the finance and law firms that drove leasing for three years.

The big commitments: American Express will own its new 2M SF, 55-story headquarters at 2 World Trade Center, Simpson Thacher & Bartlett took 916,000 SF at Extell's 570 Fifth Avenue, and Bank of America added 600,000 SF at One Bryant Park. Anthropic signed for all of 330 Hudson Street.

Five days a week: JLL's Matt Astrachan said employers want everyone in five days while top performers want their own seat, leaving many firms short of desks and driving expansions unrelated to lease expirations.

Rents climb the ladder: Rents above $300/SF are no longer rare at the top, and middle-tier space that asked about $75/SF a year ago is now priced near $125.

➥ THE TAKEAWAY

Relief is years out: About 7.9M SF is under construction for delivery between 2028 and 2032, and much of it is preleased, so tenants face a thin market for years. BK Real Estate Advisors' Bob Knakal said a 100 to 150 bps jump in rates would be the real threat to that outlook.

Around New York

➥ Northern and Central New Jersey office vacancy fell 50 bps to 24.5% in Q3, the lowest since late 2022, after six straight quarters of occupancy gains.

➥ New York ranked No. 1 in Oxford Economics’ Global Cities Index for a third straight year, with a perfect 100 on economics that keeps employers anchored here.

➥ Brooklyn developers have filed for just one condo project of 50 or more units in 2026, down from 30 in 2018, as costs push builders toward boutique buildings.

➥ NYC’s hotel pipeline has shrunk to roughly a third of its 2020 size while most Manhattan submarkets run above 80% occupancy, raising the risk of a room shortage.

➥ A GlobeSt analysis argues public-private partnerships and incentives are the key to solving the city’s housing shortage.

➥ Council member Kamillah Hanks proposed a denser, as-of-right North Shore rezoning on Staten Island, but builders say new rentals only pencil near $100/SF a year.

➥ A new Chandan Economics commuting breakdown maps how New Yorkers get to work, a useful lens on which office and housing submarkets hold demand.

Follow the Money

OFFICEMIDTOWN DRA Advisors bought a 49% stake in 1301 Avenue of the Americas alongside Rithm Capital, valuing the fully leased 1.7M SF tower at $1.3B.

OFFICEHUDSON YARDS Sony is negotiating to anchor Tishman Speyer’s planned 99 Hudson Blvd., a roughly 1.2M SF tower expected to be tenant-ready around 2030.

OFFICELOWER MANHATTAN Seward & Kissel renewed about 171K SF at One Battery Park Plaza for 11 years, helping push the Rudin tower to 99% leased.

OFFICEMIDTOWN The lender took back 500 and 512 Seventh Avenue at a foreclosure auction from the Chetrit, Moinian and Minskoff partnership, with debt topping $356M.

OFFICEGRAND CENTRAL Brenton Point Capital leased 9,000 SF on the 24th floor of Marx Realty’s 10 Grand Central at a $108/SF asking rent, moving from 900 Third Avenue.

RESIDENTIALWEST CHELSEA Toll Brothers filed plans for a 240,000 SF, 105-unit project on 10th Avenue with about 20,000 SF of commercial space, after a $45M buy of nearby sites.

MULTIFAMILYMANHATTAN Median rent held at $4,900 in September, the second-highest on record and up nearly 8% YoY, as listing inventory fell almost 23%.

📈 CHART OF THE WEEK

Businesses in New York and Northern New Jersey are primarily responding to AI by retraining employees, with over one-third of service firms and more than 20% of manufacturers taking this approach.